Ocean City – Part 9

img_0788If you’ve read every chapter in this saga, you’ll recall that our original plan was to buy and then flip this house down the road.  The details of the plan were simple….to buy the house and then sell it in a couple of years for substantially more than we’d paid for it, and then do the same thing again.  It sounded good when we bought in 2005,  but several factors intervened and changed that plan.  

First, the collapse of the housing bubble and the subprime mortgage crisis that occurred between 2007 and 2010 severely reduced housing prices across the country, including in Ocean City.  The bottom line was that we’d bought the place near the top of the curve, and our house just wasn’t worth what we’d paid for it.  Unlike many others, we’d made a pretty substantial downpayment, and had no problem paying our mortgage. We were not in risk of losing the property, but the ability for us to be able to sell for more than we’d paid just wasn’t there.

The second reason was that we no longer had any desire to sell the house, and it really didn’t matter to us if the house was worth more or less than we’d paid for it!  We were surrounded by friends who we’d started to think of as family, and between our perfect location, and our life we had in Ocean City, Susie declared that there was no way we were ever going to sell this house!

She was soooo right!

U1%FWAFbRJGRlp2oEKUPZQ_thumb_31a1Living right next door to Pennlyn Place’s Mayor, Doc Anderson, just made it a perfect location.   Everybody on Pennlyn Place knows Doc, so anytime we’ve ever met new people on the street, we just say we live next to Doc, and everybody knew where we were!  I met Doc the morning after we bought the house, and he has been a huge part of our life ever since.  Doc has been the one who has introduced us to neighbors, who has made sure we’re included in events, and who has helped our Ocean City Family grow.  I’m not just using that word, because to our minds, these friends are our family.

For example, let’s talk about when that wonderful hurricane Sandy decided to aim at the Jersey Shore!  The Governor had ordered an evacuation of Cape May County, but several of our full time neighbors decided to stay.  Doc on one side, and Patti and Meade on the other side were here through the storm, and fed us updates on what was happening on Pennlyn Place.  Luckily, Sandy decided to make landfall just a couple of miles to our North, which lessened Ocean City’s damage.  That’s not to say that it wasn’t a devastating storm, and that there wasn’t millions of dollars worth of damage on our island, but it wasn’t as bad as some of the pictures you saw on TV of other Jersey Shore communities!  

So, as the storm approached, Doc would send us pictures and reports from Pennlyn.  Even before the storm hit, the high winds caused us on Long Island to lose electric and cable.  We continued to communicate via our cell phones, finding info on the web that img_0806we shared, and hearing first hand stories from OC.  I remember Doc sending us the first pictures of the Atlantic Ocean rolling down Corinthian towards Pennlyn after it had breached the dunes north of us.  Then there were pictures from Patti and Meade’s of the river Pennlyn had become, and pictures Doc took of what our houses looked like.  Our Ocean City Family had weathered the storm on Pennlyn, but there was a lot of work ahead for all!

On the second day of no electric on Long Island, we went over to our friends Pat and Steve’s for dinner.  Steve had hooked up a generator and had satellite TV, and for the first time in several days, we were actually seeing the damage the storm had caused.  As we were sitting in their den, Fox News cut to a feed from their Fox 29 affiliate of a helicopter flying over the Jersey Shore.  We were shocked when we realized that they were over Ocean City, and even more when we recognized Pennlyn Place!  By this time the water had receded, and everything looked normal, but it really wasn’t.

On the third day, we heard from Doc that electricity was back and that they were going to open the island at noon.  At that point, we were still without electric or cable in Mineola, and laughingly decided to evacuate to the Jersey Shore!  After waiting in line for more than an hour for gas, we started on a roundabout route down to the shore, attempting to avoid any of the bottlenecks we’d heard about.  As we passed our first rest area on the Garden State Parkway, and saw a line for gas that backed up onto the parkway, we realized we’d made a good decision to gas up before we left.  Those conditions also existed at the next rest area we passed, but as we got further south, there were no lines.  As we got off at exit 30, we realized why…electric was on, gas supplies were plentiful, and it was business as usual!

We decided to stop at Acme in Somers Point before heading to the island, and were shocked to see fully stocked shelves, including shelf after shelf of bread and cases of milk.  Both had been long gone from Long Island.  When we got to the house, we found all that the receding waters had left behind, but we had electricity, heat, and even cable TV.  We decided that we were in much better shape than we’d been in Mineola that morning!

Because of the way our house is built, we were fortunate that no living space was damaged.  The ocean water invaded our under-house garage, coming up about 2 and a half cinder blocks from the floor.  Yes, we’d lost some things, but we’d been lucky that the water stopped about half a cinder block from our furnace.  We lost our garage refrigerator, some golf clubs, a lot of booze and soda, but boy did we have a mess to clean up!

For the next couple of days, we were dragging everything out of the garage, power washing and bleaching the floors and walls, shoveling “sludge” in the street, throwing out things that had been ruined, cleaning everything else, and trying our best to erase the effects of Sandy.  It was hard work, but the great thing was we were all out there doing it together!  We laughed with each other, we realized how lucky we’d been, we ate and drank together, and we continued to solidify the relationships that turned friends and neighbors into family!  It was the Silver Lining of the Cloud called Sandy!

And that’s the way it continued to be.  On any given Saturday night, year round, there is always a group from Pennlyn out to dinner in a local restaurant.  It can be 3 or it can be 18, but it’s one of the givens in our life! Winter, Spring, Summer, and Fall, if we are in Ocean City, we feel like we are home!  From the minute we drive over the new 9th Street Bridge, we know we are home and that our friends and family are close.  If we need help, we know where to go.  If were on our front porch, we’re just as likely as not to have someone walk, bike, or drive by, and stop up and join us.  It’s just a place where we have a life that we really never had on Long Island!

img_0935

img_0935

Just part of our OC Family on a recent Saturday Night

We were very fortunate when it came time to retire, because we knew exactly where we were going to go!  We didn’t have to be scared we didn’t know anybody, or were unfamiliar with the lay of the land, or wondered if the decision we made was the right one.  We knew all along!!

As I said earlier, all through our ownership of 854, we would spend at least 2 out of 4 weekends a month here.  As the years went by, we rented less in the summer and kept more weeks for ourselves.  The last full year I worked at WABC, we spent the entire 5 weeks of July here, and much of the shoulder season.  When I retired at the end of January, 2016, one of our biggest thrills was Sunday nights in Ocean City!  Having always had to head home for work on Monday, Sunday nights seemed to be a “forbidden fruit”, if you will.  Now that we both were retired (Susie had retired a couple of years before me), we NEVER traveled anymore on a Friday or a Sunday, and discovered how much easier it was to make trips to and from Ocean City on a Tuesday or Wednesday.  Sunday nights were just Sunday nights, and we loved it!  

In the next 2 sagas of our story, join us as we rent 854 for the last time, empty out a house we lived in for 31 years, and turn a second home into our primary residence!  Next time on Our New Adventures!

 

 

Ocean City – Part 4

 

img_0765

So, when we last left you, Susie and I had a house built in Las Vegas, had been the first ones to sleep in the house, and had then rented it out on a yearly lease.  We had a local property manager who collected the rent, took a percentage, and sent the balance to us monthly.  The money we got, covered the majority of the expenses of the house, we got a pretty nice tax benefit from owning and renting the house, and we had an excuse to travel to Las Vegas, which we did several times. The only thing missing was that we never got to use the house.

img_0766.jpg
Sometime in the Spring of 2004, Susie and I went for a weekend trip to Atlantic City.  Since it’s only 12 miles away from Ocean City, on Sunday, after checking out of the hotel, we took a drive to Ocean City.  I don’t remember if we hit the boardwalk or not, but we did drive around town, and when we drove by an Open House on Asbury Avenue, we decided to stop in and take a look.  The town was empty, and the realtor had been alone for most of the day, so he was more than happy to spend some time talking to us after we viewed the house.

His name was Ray, and that day was the beginning of a relationship that changed our lives!  We got down to the nitty gritty, started talking costs, hearing about how much property values in Ocean City had been increasing, talking about what we could rent out a house for during the summer season, and really had our eyes opened that day!  In the car, on the way home, we talked a lot about our future and about our real estate portfolio.  The more we thought about it, although we’d enjoyed Las Vegas a lot, we both knew that we’d miss the ocean if we retired to the South West, plus having a house 3 hours away by car rather than a 6 hour plane ride seemed to make a lot of sense!  It appeared we’d made a decision!

img_0768-1The next call was to our friend and realtor Sharon Malloy in Las Vegas.  We laid out what we were thinking of doing, and she agreed it made sense.  We loved what she told us about the Vegas real estate market, and were ecstatic when she told us what we could probably get for the Vegas house!  We gave her the okay to put the house on the market, and to have the Property Manager let the tenant (who was now renting month to month since the 1 year lease had expired) know that we were putting the house on the market.  Everything sounded like it was on track!

Well, not quite!  First wrinkle in our plan was that for some reason, the Property Manager had sent the tenant a signed lease for a 6 month extension of her rental.  Although she’d had the lease for several months, and had never signed it and returned it to the Property Manager, she was right that she had a signed 6 month extension.  Okay, that pushed the potential return of the house to us back by a couple of months.  We thought we could deal with that.  Then, the second wrinkle hit…..as we were about to put the house on the market, the bottom fell out of the Las Vegas market!

90204822-C099-4C04-B9A9-926D82D5900CRemember the US Housing Bubble in the late part of the first decade of the 21st Century?  Well, Las Vegas had it’s own housing bubble burst, but a bit earlier.   Turns out that they had overbuilt the housing stock in response to a population increase that leveled off.  Because many folks had bought multiple properties without enough capital to carry them if they didn’t have renters, they were in trouble, because the rental market was over saturated.   In reaction to what was happening, housing prices were dropping as landlords attempted to unload their unrented houses, rather than lose them to the bank.  It appeared we’d missed the house price peak.  Trust me, this only increased how pissed off we were at the Property Manager for screwing up the lease extension with our tenant!

We were very lucky, because our real estate agent Sharon was well versed in what was happening in the market, and had great advice for us.  She knew what was going on regarding sales in the development our house was located in, and came up with the perfect asking price and marketing plan for the house.  Although there were a couple of weeks of nail biting on our part, in the end it worked out.  Even though we’d missed the market peak because we couldn’t get rid of the tenant when we wanted, thanks to Sharon’s good guidance, we were able to sell our house for a very good price. We’d owned the house a bit more than a year and a half, and we’d sold it for about $140,000 more than we paid for it!  A pretty good profit in our minds for a 19 month investment!

img_0767Doing some research, I discovered that there was a tax legal way to transfer the profit gained on an investment property to another investment property, and not pay any Capital Gains tax.  Called a 1031 Like Kind Exchange, in essence it allowed us to “trade” one house for another, and if we met certain requirements, not to have a taxable event.  We found a company in Nevada that acted as the intermediary for this, and they handled all the paperwork and banked the funds until we bought the next property. One of the requirements, however, was that we had 45 days to identify that next investment property and then had 180 days to complete the purchase.

The clock was ticking!

Next time…finding that property, which turned into a home!

FYI…..

Sharon Malloy…https://www.realtyonegroup.com/realestateagent/sharon-molloy-5870774